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Re: Roping in State Attorneys General Delegating Their Power to Contingency Fee Lawyers

October 27, 2011 12:08 AM

Victor Schwartz

Fortunately, the practice of state attorneys general hiring contingency fee lawyers is on the decline. There is an old saying that "nothing cleans better than sunlight." Through good work of the Manhattan Institute's Center for Policy Research, the U.S. Chamber of Commerce's Institute for Legal Reform, the American Tort Reform Association, the Heritage Foundation, and other groups interested in civil justice reform, the unsound public policy surrounding state attorneys general hiring of contingency fee counsel has received attention from the media, legislatures, courts, and the public. In that regard, state attorneys general have a duty to the people of their state to protect the public interest. Personal injury lawyers have a different concept of their duties, which include maximizing profit and moving tort law to its most pro-plaintiff extreme. There is nothing inherently wrong with those goals; they are perfectly compatible with our capitalist system. The problem is that the goals of plaintiffs' lawyers often conflict with a state official's duty to protect the public interest.

There has been effort, through amicus or "friend of the court" briefs, to explain to state supreme courts how state attorney general delegation of responsibilities to contingency fee lawyers runs counter to the public interest. For instance, the Supreme Court of Rhode Island was quite clear in requiring that contingent fee agreements between the state and private lawyers must include "exacting limitations" that ensure that the Office of Attorney General "retains absolute and total control over all critical decision-making" and that the case-management authority of the Attorney General is "final, sole and unreviewable." Rhode Island v. Lead Indus. Ass'n, 951 A.2d 428, 475-76 (R.I. 2008).

There have also been efforts by state legislatures through the Private Attorney Retention Sunshine Act (PARSA), Transparency in Private Attorney Contracting Act (TIPAC), and similar legislation to place sunlight on state attorney generals' hiring practices. Such legislation helps to assure that if contingency fee lawyers are employed, the process takes place in the open with competitive bidding, and the agreement does not delegate too great of authority to the private counsel or result in their excessive profiteering. In the past two years, Arizona, Florida, and Indiana have enacted laws that help fulfill these goals.

A final important, and sometimes overlooked, area with respect to state attorney general delegations of authority occurs in federal legislation. Congress, in enacted legislation such as the Consumer Product Safety Improvement Act and financial reform act, and in pending legislation such as the Personal Data Privacy and Security Act of 2011, has empowered state attorneys general to enforce federal law. This process brings with it two very unsound public policy repercussions: first, this empowerment is often not accompanied by adequate supervision at the federal level to assure consistent state enforcement of federal law throughout the United States, and, second, Congress has not restricted attorneys general from delegating this newfound power to private contingency fee lawyers. What is ironic in Congress's action is that the Executive Branch of the federal government is prohibited, through Executive Order 13433, for reasons of public policy, from hiring contingency fee lawyers. Thus, Congress empowers state attorneys general to hire contingency fee lawyers where the Attorney General of the United States would be prohibited from doing so.

More sunlight needs to be placed on Congress to stop this inappropriate delegation of federal enforcement power to totally private interests. When this has occurred in the past, it should be changed by federal law. While advancements have been made to curb this unsound practice, continued efforts are needed to protect the public. The Manhattan Institute's Center for Legal Policy is to be commended for continuing the spotlight on this important issue.




Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.